The news is full of speculation at the moment that we are about to see a bursting of a ‘bubble’ in AI. ‘Will the AI bubble pop?’ asks the Sun. The New York Post predicts that the entire market is about to ‘burst’, with a market correction to follow. But it isn’t just tabloids getting carried away – the IMF is concerned about an AI correction, as are luminaries from the financial world such as Ray Dalio and Michael Burry. Burry, who famously predicted the 2008 financial crisis, has denounced Anthropic and OpenAI (the creators of Claude and ChatGPT) as ‘bubble companies’.

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And there is already some evidence in the stock market of worries about AI infrastructure spend. CoreWeave, an American data centre company backed by Nvidia which has managed to rack up $50 billion in debt, recently saw its stock price drop by a quarter. CoreWeave, like many companies in the artificial intelligence industry, has never turned a profit, and is instead practising ‘cash burn’, betting billions of dollars on AI becoming so valuable that they can set very high leasing prices for the companies using it.

So how concerned should we be? We won’t really know until the market reaches a decision on how much Anthropic and OpenAI are........

© The Spectator